How the human genome is interpreted to generate all the diverse cell types in the body remains a fundamental question in biology and medicine. Even though all cells contain the same genes, cellular differentiation requires the selective activation and suppression of genes in highly specialized cells. Failure to correctly regulate this process of gene selectivity results in cancer, developmental abnormalities, cellular degeneration, and many other disease states. Gene activation and suppression patterns during cellular differentiation are specified by epigenetic mechanisms that are heritable and subject to modifications. Eukaryotic chromatin consists of DMA wrapped around a histone octamer. Modification of the core histone tails by acetylation, phosphorylation, methylation or ubiquitination can dramatically alter the local chromatin structure and the potential for gene expression. Accumulated biochemical and genetic evidence indicates that methylation at specific lysine residues of histones H3 and H4 can determine whether a gene remains accessible to the transcription machinery or whether it is silenced into tightly packaged heterochromatin. Such epigentic modifications of histones could account for a heritable cellular memory during embryonic development and could greatly affect gene expression patterns in diseased and aging cells. The transcription factor Pax2 is essential for kidney development and can expand the region of mesoderm fated to become kidney. Pax2 has the properties of an early developmental switch that helps to specify the kidney epithelial cell lineage. Pax proteins are conserved from worms to humans and bind DNA directly, yet their mechanisms of action remain obscure. We have identified a protein called PTIP that interacts with the transactivation domain of Pax2. As outlined in the preliminary data, PTIP is an essential protein that associates with histone methyltransferase (HMT) activity. In this proposal, the function of PTIP and Pax2 in epigenetic modification of chromatin will be tested in a variety of genetic and biochemical systems. Mouse conditional PTIP mutants and Drosophila PTIP hypomorphs will be used to test the role of PTIP in vivo. Biochemical purification and cell based histone methyltransferase assays will examine the activity of PTIP and its associated proteins. PTIP may be a direct link between developmental regulatory factors such as Pax2 and the mechanism of epigenetic modifications that determine and fix cell lineages.